Hedge funds’ bullish bets on gold jump to four-year high
Hedge funds and other large speculators boosted their net-long position in gold.
After a nice bump at the end of last week on the back of a so-so US jobs report and some short-covering on futures markets, gold is drifting lower again in anticipation of a Federal Reserve rate hike announcement next week.
On Wednesday on the Comex division of the New York Mercantile Exchange, gold futures for February delivery – the most active contract – were last trading at $1,072 an ounce, down from Friday’s close of $1,084.
Sentiment among gold buyers remains weak with investors in exchange traded funds backed by physical gold offloading metal consistently for nearly two months.
Holdings in SPDR Gold Shares (NYSEARCA: GLD) – which accounts for more than 40% of the total ETFs traded – have fallen by 62.7 tonnes since mid-October when inflows sent total holdings briefly back above 700 tonnes.
Total holdings have now fallen to 634.6 tonnes or 20.4 million ounces worth $22 billion. Once the largest ETF in the world, in June this year GLD dropped out of the top ten with assets under management more than $50 billion below its 2011 peak.
Holdings have fallen to the the lowest since 19 September 2008. The collapse of Wall Street investment bank Lehman Brothers sparked the global financial crisis occurred September 15 that year.
Total assets in the dozens of gold-backed ETFs listed around the world dropped to 1,465.2 tonnes on Monday according to Bloomberg data. Global ETF vaults held a record 2,632 tonnes or 93 million ounces of gold in December 2012.
The futures market has also been hit be negative sentiment with the latest Commitment of Traders data showing hedge funds building up record-breaking short positions – bets that prices will fall.
7 Comments
Mr. L
“Total holdings have now fallen to 634.6 tonnes or 20.4 million ounces worth $22 billion. Once the largest ETF in the world, in June this year GLD dropped out of the top ten with assets under management more than $50 billion below its 2011 peak.”
How reliable are GLD’s holding reports? GLD does not give retail investors the right to redeem for any of its mystery physical gold holdings. This fact alone ensures the GLD shares to be nothing more than paper at the end of the day. GLD also has a glaring audit loophole in their prospectus that states they have no right to audit subcustodial gold holdings. To this day, I have not heard of a single good reason for the existence of this backdoor to the fund. Some other red flags I’ve verified and welcome everyone else to do the same:
“Did anyone try calling the GLD hotline at (866) 320 4053 in search of numerical details on GLD’s insurance? The prospectus vaguely states “The Custodian maintains insurance with regard to its business on such terms and conditions as it considers appropriate which does not cover the full amount of gold held in custody.” When I asked about how much of the gold was insured, the representative proceeded act as if he didn’t know and said they were just the “marketing agent” for GLD. What kind of marketing agent would not know such basic information about a product they are marketing? It seems like they are deliberately hiding information from investors.
I remember there was a well documented visit by CNBC’s Bob Pisani to GLD’s gold vault. This visit was organized by GLD’s management to prove the existence of GLD’s gold but the gold bar held up by Mr. Pisani had the serial number ZJ6752 which did not appear on the most recent bar list at that time. It was later discovered that this “GLD” bar was actually owned by ETF Securities.”
NomeOceanGold
Mr. L,
you are obviously a ‘doubter” it is well written.
what large Organization or Govt. agency has Not lied and cheated until they got caught.??? I am mining gold with 3 JackUp Platforms in the Nome, Alaska Marine Gold Field.
I am not a Gold Bug, but I have seen the footprints and fingerprints of the same shenanigans of lies, manipulation and conspiracy by institutions and governments regarding printing cash and moving gold here and there, not one depot could stand a true audit. http://www.nomeoceangold.com
Endgame
MUMBAI, India — A bullion association in India is planning to launch the country’s first physical gold trading exchange, in an attempt to bring transparency to the market for the precious metal in the world’s second biggest consumer.
The Mumbai-based India Bullion and Jewellers Association, a group consisting of gold dealers, traders, and jewellers, is talking with industry officials about launching the exchange next year.
A dedicated physical gold exchange could lead to standard gold pricing in India, and could also bring transparency to a market which can involve large cash transactions.
Endgame
China’s Gold Army
China has a military unit dedicated to gold exploration, this unit is the only one of its kind in the world.
The gold exploration unit was established in the beginning of China’s reform and opening up, when the country urgently needed to increase its gold reserves. The unit has found more than 1800 tons of gold so far, helping China become the world’s largest gold-producing country.
China’s annual gold production was merely 4 tons when PRC was founded. After the gold exploration unit of the Chinese People’s Liberation Army was established in 1979, 12 detachments were sent to all over China. The picture shows soldiers from the 7th detachment of the gold exploration unit singing songs on their way in March 2006.
Gold reserves are usually located in remote and inaccessible areas. The picture shows soldiers from the 8th detachment of the gold exploration unit fighting sandstorm in Lop Nur in August 2002.
In 1995, China’s gold production for the first time exceeded one hundred tons, taking the 8th place in the world. More than half of the gold reserves were found by the gold exploration unit. Eight years later, China’s annual gold production exceeded 200 tons. The picture shows a soldiers from the 8th detachment of the gold exploration unit carrying out explosion works in August 2002.
ThaOracle
What if I were to tell you ………… that true physical backing comprises buying metal and burying it. You can later pretend you are an explorer and make a discovery! Far more secure, and much more fun.
therooster
Gold is emerging as a fully liquid debt-free currency which will place a whole new application application and demand on bullion . Hopefully, we will awake to realize that it’s bullion’s movement, economic stimulus and its ability to allow for safe debt purging that puts support under the price.
Gold that sits idle has no real economic value.
JH
Here’s a thought….”Total holdings have now fallen…..” Scary huh!
Think about this for a moment. If we were talking about the US Strategic Oil Reserves you would correctly understand the situation. Oil is consumed and the tank went down.
But gold isn’t consumed in any significant way. If the total is falling, someone is selling…we all get that part, but who is the stupid person relentlessly buying all the quantity that holdings coughed up??? And why?
Frik could put his investigative talents into this and hence present ALL the picture rather than the picture fed to him and write about what is really going on….